Zero lower bound no longer applies to crude oil prices – Rabobank

"On Monday, the spot May-20 Nymex WTI contract, collapsed on the penultimate trading day prior to its expiration and settled at an unbelievable -$37.63/bbl," noted Rabobank Commodity Strategist Ryan Fitzmaurice.

Key quotes

"In our view, this historic move was largely the result of a technical squeeze related to contract expiration and the nuances of exchange contract specifications. The May-20 WTI contract had 108mb of open interest outstanding coming into Monday, the day before expiry, or more than three times the available capacity at the delivery point."

"Conventional wisdom assumed a zero lower bound for oil prices, an important condition which no longer applies after this week."

"Looking forward, while it is theoretically possible that we find ourselves in this same position again, it’s worth remembering that this move into negative territory was as much about forced liquidations as it was about storage capacity, at least to our minds."